House GOP ends tax stalemate

WASHINGTON — House Republicans on Thursday caved to demands by President Barack Obama, congressional Democrats and fellow Republicans for a short-term renewal of payroll tax cuts for all workers. The breakthrough almost certainly spares workers an average $20 a week tax increase Jan. 1.

After days of wrangling that even Speaker John Boehner acknowledged "may not have been politically the smartest thing in the world," the Ohio Republican abruptly changed course and dropped demands for immediate holiday season talks with the Senate on a full-year measure that all sides said they want.

The House and Senate plan to act on the two-month extension today.

House Republicans were under fire from their constituents and GOP establishment figures incensed that they would risk losing the tax cut issue to Democrats at the dawn of the 2012 presidential and congressional election year.

"In the end House Republicans felt like they were re-enacting the Alamo, with no reinforcements and our friends shooting at us," said Rep. Kevin Brady, R-Texas.

Boehner said he expects both House and Senate to pass a new bill by Christmas that would renew the tax break while congressional negotiators work out a one-year measure that would also extend jobless benefits for millions of Americans and prevent doctors from absorbing a big cut in Medicare payments.

The developments were a clear win for Obama. The payroll tax cut was the centerpiece of his three-month campaign-style drive for jobs legislation that seems to have contributed to an uptick in his poll numbers.

"Because of this agreement, every working American will keep his or her tax cut — about $1,000 for the average family," Obama said in a statement. "That's about $40 in every paycheck. And when Congress returns, I urge them to keep working to reach an agreement that will extend this tax cut and unemployment insurance for all of 2012 without drama or delay."

The GOP retreat ends a tense standoff in which Boehner's House Republicans came under great pressure to agree to the short-term extension passed by the Senate on Saturday. The speaker was initially open to the idea, but rank and file Republicans revolted and the House instead insisted on immediate talks.

The conflict arose after the Senate, on a bipartisan vote, passed legislation last week to extend for two months the payroll tax cut, jobless benefits and doctors' Medicare fees that otherwise would have been cut 27 percent. Just days before, the House had passed a full-year extension that included a series of conservative policy prescriptions unpalatable to Obama and congressional Democrats.

Obama, Republicans and congressional Democrats all said they preferred a one-year extension but the politics of achieving that eluded them. All pledged to start working on that in January.

"Has this place become so dysfunctional that even when we agree to things we can't do it?" Obama asked. "Enough is enough."

The top Senate Republican, Mitch McConnell of Kentucky, was a driving force behind Thursday's agreement, imploring Boehner to accept the deal that McConnell and Senate Democratic leader Harry Reid had struck last week and passed with overwhelming support in both parties.

The breakthrough emerged as a firewall erected by tea party-backed House Republicans crumbled Thursday.

"I don't think that my constituents should have a tax increase because of Washington's dysfunction," said freshman Rep. Sean Duffy, R-Wis.

Almost forgotten in the firestorm is that McConnell and Boehner had extracted a major victory last week, winning a provision that would require Obama to make a swift decision on whether to approve construction of the Keystone XL oil pipeline, which would bring Canadian oil to the United States and create thousands of construction jobs.

To block the pipeline, Obama would have to declare that is not in the nation's interest. Obama wanted to put the decision off until after the 2012 election.

House GOP ends tax stalemate 12/22/11 [Last modified: Thursday, December 22, 2011 10:52pm]

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